POSCO India dream fades: Protests and sand but no steel

Despite years of protests and battles over environmental clearances, Posco insists it is not about to throw in towel. (AP)

SummaryDespite years of protests and battles over environmental clearances, Posco insists it is not about to throw in towel.

POSCO India dream: A few weather-beaten shipping containers, a swathe of sand and a bitterly divided village: that is all South Korea's co has to show seven years after it announced plans for a $12 billion steel mill on a fertile strip of India's east coast.

Last week, the project took a step forward as land was taken over from farmers for the first time since 2011, and yet Posco is still a long way from its goal of forging steel there.

Despite the years of protests and battles over environmental clearances, Posco insists it is not about to throw in the towel. However, if a court ruling on access to local iron ore goes against it, that could push it over the edge.

The fiasco over what was billed as India's single largest planned foreign investment epitomises the slow pace of industrialisation in a densely populated country where almost every major project involves moving farmers off their land.

Prime Minister Manmohan Singh has repeatedly vowed to change the snail-like progress of India's biggest industrial developments and end delays to road building and power stations, blamed for dragging economic growth and fuelling inflation.

But the issues refuse to go away.

"Police out! Death to Posco!" a hundred or so villagers and Communist Party activists shouted at a group of policemen who set up camp in the village of Gobindpur last week, the first police presence there since protesters rose up against the project in 2006.

A few kilometres away, POSCO has built a site office in nine shipping containers. Along with a generator, a flimsy barbed-wire fence and a couple of signs, this is all the work that has been done on the 2,000 acres (809 hectares) set aside. They need another 700 acres before work can begin.

POSCO India reiterated its "strong resolve and commitment" to the project in a statement on Friday. But analysts say the company may think again if a pending Supreme Court decision on preferential access to a local iron ore mine goes against it.

"They didn't come here because of their love of India," said Rakesh Arora, a metals expert and head of research at Macquarie Capital Securities (India). "Without the iron ore it would be cheaper to set up in China, where the capital costs are lower."

A court in the state of Odisha has already ruled against Posco on guaranteed supplies from the Kandahar iron ore reserve. Last month, the Supreme Court